121 P.3d 1080 (Okla. 2005), 98,136, Badillo v. Mid Century Ins. Co.

Docket Nº:98,136, 98,138.
Citation:121 P.3d 1080, 2005 OK 48
Party Name:Mario BADILLO, Appellee/Counter-Appellant, v. MID CENTURY INSURANCE COMPANY, a California Corporation; Farmers Insurance Exchange, a California reciprocal or interinsurance exchange, Appellants/Counter-Appellees.
Case Date:June 21, 2005
Court:Supreme Court of Oklahoma

Page 1080

121 P.3d 1080 (Okla. 2005)

2005 OK 48

Mario BADILLO, Appellee/Counter-Appellant,


MID CENTURY INSURANCE COMPANY, a California Corporation; Farmers Insurance Exchange, a California reciprocal or interinsurance exchange, Appellants/Counter-Appellees.

Nos. 98,136, 98,138.

Supreme Court of Oklahoma

June 21, 2005

As Corrected June 22, 2005.

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¶ 0 Appellee/counter-appellant (insured) hit a pedestrian (third party) with his truck, the latter suffering injuries. Appellants/counter-appellees (insurers), two affiliated companies, either issued insured's automobile liability insurance policy with a $10,000.00 policy limit and/or handled the claim made by attorneys acting on the third party's behalf. The claim did not settle, insured was sued and a judgment in excess of $600,000.00 against insured was entered for the third party. Insured then sued insurers for breach of the duty of good faith and fair dealing, the case was tried to a jury, and a verdict awarded insured $2,200,000.00 in actual damages, on which judgment was entered. Insurers appeal, claiming trial court error in failing to direct a verdict in favor of one or both, and, alternatively, that other errors warrant reversal and a new trial. Insured counter-appeals, asserting trial court error in directing a verdict for insurers as to his punitive damage claim, and in denying him attorney fees and prejudgment interest. This Court has retained the appeals.


Mark E. Bialick, Gerald E. Durbin, II and Rodney D. Stewart of Durbin, Larimore & Bialick, Oklahoma City, Oklahoma for Appellee/Counter-Appellant.

Eric S. Eissenstat, Stephen R. Stephens and Brooks A. Richardson of Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Oklahoma for Appellants/Counter- Appellees.

Kenneth G. Cole of Burch & George, Oklahoma City, Oklahoma for amicus curiae, Oklahoma Trial Lawyers Association.

Phil R. Richards and Thomas D. Hird of Richards & Connor, Tulsa, Oklahoma for amicus curiae, Oklahoma Association of Defense Counsel.


¶ 1 These appeals involve a suit by Mario Badillo, appellee/counter-appellant (insured) against Mid Century Insurance Company (MCIC) and Farmers Insurance Exchange (FIE), appellants/counter-appellees (insurers) for breach of the duty to act in good faith and to deal fairly with him as their insured.1 The case was tried to a jury, a verdict awarded insured$2,200,000.00 and judgment was entered thereon. Insurers appeal, contending trial court error in failing to direct a verdict for of one or both, and,

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alternatively, that other errors warrant reversal and a new trial. Insured counter- appeals, asserting trial court error in granting a directed verdict to insurers as to his punitive damage claim, and in denying his quest for attorney fees and prejudgment interest. We have retained the appeals. In that no reversible error has been shown, we affirm the trial court's judgment on the jury verdict and orders denying insured's quests for attorney fees and prejudgment interest.


¶ 2 In Florafax International, Inc. v. GTE Market Resources, Inc., 1997 OK 7, 933 P.2d 282 this Court set forth the general appellate standard of review concerning actions at law tried to a jury. This Court said in Florafax:

In an action at law, a jury verdict is conclusive as to all disputed facts and all conflicting statements, and where there is any competent evidence reasonably tending to support the verdict of the jury, this Court will not disturb the jury's verdict or the trial court's judgment based thereon. Where such competent evidence exists, and no prejudicial errors are shown in the trial court's instructions to the jury or rulings on legal questions presented during trial, the verdict will not be disturbed on appeal. In an appeal from a case tried and decided by a jury an appellate court's duty is not to weigh the evidence and determine which side produced evidence of greater weight, i.e. it is not an appellate court's function to decide where the preponderance of the evidence lies - that job in our system of justice has been reposed in the jury. In a jury-tried case, it is the jury that acts as the exclusive arbiter of the credibility of the witnesses. Finally, the sufficiency of the evidence to sustain a judgment in an action of legal cognizance is determined by an appellate court in light of the evidence tending to support it, together with every reasonable inference deducible therefrom, rejecting all evidence adduced by the adverse party which conflicts with it.

933 P.2d at 287. (citations omitted).

¶ 3 In plain language, we are not allowed to substitute our judgment for that of the jury merely because we would have decided or viewed disputed material fact questions differently than the jury. Where competent evidence was presented at trial to support reasonable findings as to those material fact questions relating to the claim in suit and no reversible error is otherwise shown, an appellate court must affirm a judgment based on a jury verdict, not second-guess such judgment or the jury verdict upon which it is based. These general principles guide our review here.2


¶ 4 On February 4, 2000, insured while driving his truck hit a pedestrian, Loretta Jean Smith, as she was crossing South Robinson at Southwest 25th Street in Oklahoma City. According to the police report, the collision occurred as insured made a right turn from eastbound 25th Street to go south on Robinson. Smith was seriously injured; she was in a comatose and/or semi-comatose state for much and, possibly all, of the time period between the date of the accident and April 17, 2000, the date her sister, Johnita Pamela Young filed suit, in a representative capacity for Smith, against insured. Although her injuries were serious, Smith eventually recovered to such an extent it was no longer necessary for Young to act as a representative for her.

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¶ 5 Smith incurred hundreds of thousands of dollars in medical bills for treatment received for injuries resulting from the collision. Insured had a $10,000.00 automobile liability policy issued by MCIC. MCIC and FIE are affiliated companies, both under the umbrella of the Farmers Insurance Group of Companies. FIE employees handled the claim made against insured under the policy of insurance. The policy gave MCIC authority to settle any claim made for the liability coverage as it deemed appropriate.

¶ 6 Insured informed insurers of the incident and insurers instructed him by letter not to discuss the case with anyone other than insurers or authorized representatives thereof. Insured testified that the adjuster (Mr. Wallis) handling the claim for insurers told him telephonically basically the same, i.e., do not talk to anyone about the accident and to refer any contact concerning it to the adjuster. In another letter, insurers informed insured that the value of Smith's claim might exceed the policy limits. The record also reflects that Wallis never met face-to-face with insured to go over the circumstances of the accident, although he did talk with insured by telephone concerning it. Although Wallis reviewed the police report of the accident, he never spoke directly with the police that worked the accident, something which in this type of serious injury situation insurers' branch claims office procedure manual says should have been done.

¶ 7 Young employed lawyers on Smith's behalf relatively quickly after the accident. Wallis was informed by a letter dated February 9,2000 from one of the attorneys, Ms. Burton, that Smith had retained counsel. At said time, the other attorney was Mr. Forbes, who acted as Burton's superior or supervisor, as Burton was a relatively new attorney, while Forbes was a more experienced lawyer.

¶ 8 In February 2000 Wallis had telephonic discussion with Burton. Although the trial record supports a reasonable finding the matter was not finally settled, he sent a check for the $10,000.00 policy limits and a release to her, which she had requested. Thus, early in the matter insurers offered the policy limits to settle the claim being made against insured. Basically, Wallis testified he orally settled the case with Burton, but she denied the case was so settled. There is no question, however, settlement negotiation(s) and/or discussions took place between Wallis and Burton. There was also sufficient evidence presented to the jury to show that prior to the time the settlement check and release were sent by Wallis to Burton, Wallis knew or should have known the claim against insured was one of probable liability (even though Smith might have been in some percentage negligent) and that it was pretty much certain Smith's damages greatly exceeded the $10,000.00 policy limits.

¶ 9 After receiving the check and release, Burton and Forbes discussed the matter and decision was made that it would be a mistake to then recommend to Young that the release be signed, without conducting further investigation into whether there might be an employer or some other person or entity to pursue in the matter, in addition to insured. In an effort to pursue said investigation Burton, by letter dated March 3, 2000...

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